Apps cash in on Spring Festival

Festive red envelopes have gone digital this year as rival Internet giants launched new online apps that enable smartphone users to send cash gifts to each other during the holiday.

China's largest Internet company in terms of revenue, Tencent Holdings, launched the new function for its 600 million WeChat users on Sunday, allowing them to send money electronically either to a specific person or a group of friends.

The fun only really starts when the pot of cash gets randomly divided among friends, creating winners and losers.

"It's so exciting that I even just ignored a phone call from a client in order to grab the red envelope," Wang Peng, a 32-year-old white-collar worker in Shanghai, told the Global Times on Wednesday.

One of his friends had received red envelopes totaling more than 2,000 yuan, Beijing WeChat user Li Jing said Wednesday.

WeChat is the Chinese equivalent of WhatsApp. The function proved so popular it crashed temporarily on Wednesday night.

If WeChat users want to send or cash in red envelopes, they need to link their messaging mobile app account to their bank account. This is Tencent's strongest effort yet to commercialize its WeChat platform, analysts agree.

"The function was actually first invented by e-commerce giant Alibaba Group," Ding Daoshi, a deputy managing editor of IT website sootoo.com, told the Global Times on Wednesday. "But as a latecomer, Tencent has quickly gained popularity because of WeChat's social networking features and its innovation in adding fun for lovers of gambling."

Alibaba Group launched a similar function through its Alipay payment platform last week, allowing users to ask for red envelopes from their acquaintances.

Data from Alipay showed the day after the function was launched 79,000 users had asked for red envelopes and 72,000 users had sent them, totaling 18 million yuan.

Tencent has not released any official data for how many users have tried the new function, but analysts estimate Tencent will be the winner of the red-envelope battle.

Citing a research note released by Standard Chartered Bank, Reuters on Wednesday said the release of a red-envelope feature triggered a surge in Tencent's WeChat Payment users from 30 million to 100 million in under a month.

Tencent spokesman Zhang Jun told China Central Television the "100 million users" estimate had been overstated, and appealed for a more rational attitude to the red envelope feature.

"The average value of each red envelope was about 7.5 yuan, and it was grabbed in one or two seconds at the quickest," Zhang said.

"The feature will help Tencent increase its competitiveness against Alibaba," Lu Zhenwang, an analyst with Shanghai Wanqing Commerce Consulting, told the Global Times on Wednesday.

WeChat Payment users could hit 200 million by the end of 2014, which would see Tencent move ahead of Alibaba and its Alipay online payment affiliate, said the Standard Chartered note.

Alipay said in November last year its mobile user numbers surpassed 100 million.

The prevalence of mobile Internet and smartphones has also changed traditional ways of celebrating the Chinese lunar new year, analysts said.

"People used to send text messages or make phone calls during Spring Festival holiday, but in recent years more and more people have turned to social networking apps like WeChat and Weibo, posing challenges to telecom operators," Lu said.

Although the number of text messages sent during the last lunar new year's eve hit a record high of 13.3 billion, data from the country's three major telecom operators showed the average number of text messages sent per person decreased to 36 from 42 a year earlier.